We wake up to "morning in America" with almost nothing changing. With its whopping 10%ish approval rating, Americans have spoken loud and proud – "Congress sucks!! Except for my Congress person." As for the presidential race, Obama won every swing state except for North Carolina it appears and the country will have 4 more years of the same partisan nonsense appears. From what I am hearing on the TeeVee this morning it sounds like the GOP House is willing to take America over the fiscal cliff so that they can stay true to their Grover N. pledge of not raising taxes…. i.e. let rates revert back to pre Bush levels in early 2013 so they can cut them again, even if the new rates will be higher than they would be at the end of 2012. This sort of logic defines the state of our leadership. (as always I am non partisan, stupidity reigns supreme on both sides of the aisle and the main winners now and go forward are our major corporations and their lobbyists which apparently the country is being run for.)
With that said, futures were all over the place last night – the immediate reaction to the election data was a sharp selloff, then a huge rally around midnight-1AM to get to a positive result. None of it made sense to me as we woke up this morning to the exact same political structure as we had yesterday. The gains looked to be holding this morning until ECB Prez Draghi made some negative comments about economic contagion spreading to Germany. There was also a bad industrial report out of Germany this morning as well.
- German September Industrial Production data came in worse-than-expected posting a 1.8% decrease on a monthly basis and -1.2% year-over-year. In the opinion of Carsten Brzeski from ING this outcome further suggests that "German decoupling from the rest of the Eurozone has come to an end" as the global slowdown is affecting its trading links with non-Eurozone countries.
But as always it is the reaction to the news, not the news that matters – there have been many times bad economic data came out of Europe and no one cared. Until the S&P 500 breaks out one way or the other from this low 1400s to mid 1430s range, it is a 'white noise' spot.
- The slowdown in the euro zone is now impacting Germany, European Central Bank President Mario Draghi said on Wednesday, warning that data shows that Europe's biggest economy is no longer shielded from the effects of the euro zone debt crisis. "Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area. But the latest data suggest that these developments are now starting to affect the German economy," Draghi said.
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